Milestone FDA approval for Acrux

Biotech company
Acrux
is poised to enter the $US1.2 billion global testosterone replacement market by mid-2011 after receiving approval from the United States Food and Drug Administration to market its underarm testosterone solution Axiron.

Pharmaceutical giant Eli Lilly signed a marketing deal with Acrux in March, which is valued at $US335 million. That sum includes a $US50 million initial payment and $US$87 million following FDA approval.

Acrux said the milestone payment would be received within the next 15 days, and will boost its cash reserves to about $145 million.

It will be eligible for further royalty payments for future global sales and potential commercialisation milestones, believed to be worth about two-thirds of the initial licensing agreement, or about $US220 million.

Axiron is a prescription drug that is applied to the armpit like a deodorant for treating low levels of testosterone in men. Acrux chief executive
Richard Treagus
said entry into the US was a huge breakthrough for the company.

“Rather than signing with a licensing partner in 2007, we decided to raise $23 million and take the product through development," Dr Treagus told The Australian Financial Review yesterday.

“We entered strong partnership with Eli Lilly earlier this year and over the next four to six months we’ll be doing preparation for the launch with Lilly in the US," he said.

“The royalty component of the deal we believe will be in excess of the milestone payments."

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Dr Treagus said only about 5 per cent to 10 per cent of males with low testosterone were diagnosed, and the US markets accounted for about 80 per cent of global sales.

“Marketing in the US will be the first step, and Eli Lilly will be applying for marketing approval for the Therapeutic Goods Administration. We’re taking it one step at a time," Dr Treagus said.

Shares in Acrux soared by almost 10 per cent to close at a record high of $3.36 after being released from a trading halt yesterday. They have risen more than 40 per cent since the beginning of October, and are up more than 50 per cent this year.

Acrux delivered an initial full-year profit of $46.6 million, following the agreement with Eli Lilly.